July 17, 2017

Nevada Enacts Multiple Laws Affecting Consumer Finance

by the Consumer Financial Services Group

Nevada is rolling out a slate of legislation affecting consumer finance, including a measure to protect consumers’ privacy online and programs aimed at mitigating their risk of foreclosure. Here is a list of measures recently signed into law by Governor Brian Sandoval.

New Website Privacy Notice:SB 538, which goes into effect October 1, 2017, contains provisions intended to protect the internet privacy of consumers, including a requirement that website operators display a notice identifying certain categories of information collected through the website and also disclose information related to collection of personal data.

The measure defines a website operator as anyone who:

owns or operates a website or online service for commercial purposes;

purposefully directs its activities toward the State of Nevada by transacting with consumers therein; and

collects and maintains certain information about consumers (such as a first and last name, address, email, and telephone contact information).

There is no private right of action, but a violation of this section can lead to injunctive relief by the Nevada Attorney General and a civil penalty of $5,000 for each violation.

Fees Banned for Updating or Changing Consumer Records:AB 361, which took effect July 1, 2017, amends Nevada's Deceptive Trade Practices Act to prohibit the charging of fees to update or change a consumer's records, including billing or credit information. Nevada law provides an existing private right of action for violations of the Deceptive Trade Practices Act, which allows for damages, any appropriate equitable relief, and attorneys' fees.

One Year Post-Service Foreclosure Protection for Service Members: Congress modified the Servicemembers Civil Relief Act to decrease from one year to 90 days the period after completion of service during which service members are protected from a sale, foreclosure, or seizure of property. The change is effective January 1, 2018. However, the Nevada Legislature, via Senate Bill 33, reestablished as a matter of state law a one-year protection period following the end of active duty or deployment for service members and, in certain instances, a dependent of a service member. The bill, which took effect May 29, 2017, amends Nevada Revised Statutes Chapters 40 and 107, governing deeds of trust, and 116, governing community or homeowners associations (HOAs).

Pre-Default Vehicle Repossession Added as Deceptive Practice:Assembly Bill 262, which becomes effective October 1, 2017, amends Nevada's Deceptive Trade Practices Act by making it a deceptive trade practice for any person to repossess a vehicle from a debtor before default, or to commit any act that grants a consumer any remedy available under Nevada's version of Uniform Commercial Code (UCC) 104.9625. That measure already provides remedies to a consumer for a secured lender's failure to comply with UCC Article 9. A violation of this provision is subject to a private right of action under the Deceptive Trade Practices Act, which allows for damages, any appropriate equitable relief, and attorneys' fees.

Revised Uniform Fiduciary Access to Digital Assets Act of 2015:Assembly Bill 239, which becomes effective October 1, 2017, enacts the Revised Uniform Fiduciary Access to Digital Assets Act of 2015. Nevada is one of 15 states that have enacted the Act, which is intended to facilitate access to, and use of, digital assets by state-law appointed fiduciaries (such as executors of an estate, guardians, agents under a power of attorney, and trustees) who manage the property of a person who has died or is no longer in charge of his or her own affairs.

The Act defines a digital asset as "an electronic record in which a natural person has a right or interest," and is described by the Uniform Law Commission as "documents, photographs, email, and social media accounts." The Act is intended to work alongside federal privacy laws involving emails and social media conversations by governing the circumstances under which "Custodians"—defined by the Act as anyone who "carries, maintains, processes, receives, or stores a digital asset of a user"—can release digital assets to a fiduciary when the user who created the electronic record has not consented to disclosure, and the fiduciary has not presented certified documents, such as a court order, a copy of a will, or a death certificate. A user's directive via an online tool or in a will can be deemed to override a custodian's terms-of-service agreement. The definition of a custodian is so broadly worded that it could include virtually any business that interacts with customers and maintains electronic copies of those communications.

New Lender Notice Requirement for Homeowners Associations: As community associations and HOAs continue to fuel litigation in Nevada, Senate Bill 239, which goes into effect October 1, 2017, imposes a new notice requirement on HOAs. Nevada law allows an HOA to enter the grounds of a home to abate a nuisance or maintain its exterior under certain circumstances. Prior law required an HOA to notify a lender of its intent to enter grounds in such instances only if the lender had started the foreclosure process. Senate Bill 239 amended Nevada Revised Statutes Chapter 116 to require an HOA to provide notice, via certified mail, to each holder of a recorded security interest encumbering a home, of the HOA's intent to enter a unit that is vacant but not in the foreclosure process to abate a nuisance or maintain the unit's exterior. If the HOA enters or modifies a property for these purposes, it can impose the costs upon the homeowner and will have a corresponding lien that is superior in interest to a first deed of trust.

Foreclosure Mediation Program Revived and Made Permanent: In 2015, the Nevada Legislature passed a bill ending the State's Foreclosure Mediation Program as of June 30, 2017. The program required foreclosing lenders to enter mediation with participating borrowers and included strict requirements for lenders coupled with heavy sanctions for noncompliance such as monetary awards and forced-loan mediations. Senate Bill 490 revived the Foreclosure Mediation Program as a permanent fixture, along with enacting several other changes. This law went into effect June 12, 2017—applying retroactively to December 2, 2016—to both judicial and non-judicial residential foreclosures. Changes to the program include:

The Nevada Supreme Court will no longer administer the program. Instead, it will be administered by Home Means Nevada, Inc., a nonprofit corporation established by the Nevada Department of Business and Industry and aimed at helping homeowners retain their homes. Mediations will be overseen by the district court.

Enrollment into the program now requires a petition to the district court and a $25 filing fee. The petition must be filed within 30 days of the receipt of a Notice of Default and Election to Sell and served via certified mail.

An electronic filing system will be implemented for notices and certain documents exchanged between parties.

The Mediation Administrator is tasked with developing an internet portal for administering the program.

The fee for the mediation has increased from $400 to $500.

Now that the program is permanent, lenders should review requirements to ensure compliance and to monitor how it unfolds administratively.

Ballard Spahr's Consumer Financial Services Group is nationally recognized for its experience with the full range of federal and state consumer credit laws, as well as its guidance in structuring and documenting new consumer financial services products, and its skill in litigation defense and avoidance (including pioneering work in pre-dispute arbitration programs).

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This alert is a periodic publication of Ballard Spahr LLP and is intended to notify recipients of new developments in the law. It should not be construed as legal advice or legal opinion on any specific facts or circumstances. The contents are intended for general informational purposes only, and you are urged to consult your own attorney concerning your situation and specific legal questions you have.